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Business Environment Seen Impacting Settlements

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Several factors affected the life settlement business at National Financial Partners Corp. in the second quarter, according to Doug Hammond.

Hammond, chief operating officer of National Financial Partners Corp., New York, an independent distributor of financial services products, talked about the factors recently during a call with analysts.

First, there has been “margin compression in the business, which is driven by heightened transparency and regulatory initiative,” Hammond said.

“Margin compression appears to have stabilized, and we feel this is consistent with the maturation of this market,” Hammond said, according to a transcript made by Seeking Alpha, Bronx, N.Y., a firm that offers stock market opinion and analysis at Document Link.

Second, “concerns over the risks associated with the purchase of non-traditional premium finance policies have caused many investors to implement a more rigorous diligence process,” Hammond said, according to the transcript.

This “slowed the closing process and in some cases, reduced the settlement value or precluded a settlement altogether of such policies,” Hammond said.

“Finally,” he said, “turmoil in the credit market has impacted the ability of certain investors to deploy capital at the same levels as prior periods.”

Going forward, Hammond predicted “significant opportunity” in the settlement market. NFP expects to participate in those opportunities through its own distribution network, he said, and also through Institutional Life Services, a new life settlement joint venture NFP has formed with Goldman Sachs Group Inc., New York, and Genworth Financial Inc., Richmond, Va.

The joint venture “began a limited acceptance of policies on July 1st,” Hammond said.

NFP Chairman Jessica Bibliowicz observed that, “Overall, second-quarter results were impacted by economic and financial market conditions as well as a challenging life insurance underwriting environment in the high net worth, older age market.”

“These factors had the most impact on our life settlement, retail life insurance and executive benefits businesses,” Bibliowicz said in a statement about NFP’s second-quarter results.

The markets NFP serves “enjoy strong underlying demand,” Bibliowicz said.

NFP serves high-net-worth individuals and companies, according to NFP.

Bibliowicz predicted “more normalized growth rates as market conditions stabilize.”


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